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Thursday, April 10, 2008

Yahoo Teaming Up With AOL? Microsoft to Team With News Corp?

Yahoo Inc appears to be running out of alternatives to accepting Microsoft's takeover offer, or is it. According to Reuters Yahoo is closing in on a deal with Time Warner's AOL unit. In the mean time News Corp is reportedly considering joining Microsoft in a bid for Yahoo a combination which would bring together three of the biggest Web site publishers on the Internet: Yahoo, Microsoft's MSN and News Corp's MySpace

Reports on any plans from the Microsoft were sketchy to say the least, so its on exactly how any of the deals might be structured. However the article says the Yahoo's talks with Time Warner are nearing an agreement. The deal would see Time Warner adding AOL's business, excluding its legacy dial-up Internet access operations, into a combined Yahoo company. Yahoo would receive cash from Time Warner in exchange for 20 percent of a combined Yahoo-AOL, the source said.

The Wall Street Journal cited sources saying Yahoo would use the Time Warner cash and other funds to buy back several billion dollars worth of Yahoo stock at a price somewhere in the middle of the range between $30 and $40 a share.

To add yet another wrinkle to the equation Reuters also reports Yahoo is going to begin testing the use of Google search ads. A move which Microsoft claims is anti-competitive. In a statement, Microsoft General Counsel Brad Smith said "Yahoo and Google would consolidate over 90 percent of the search advertising market in Google's hands" thus creating a virtual stranglehold on the advertising market.